According to the Federal Deposit Insurance Commission, over 90 million individuals in the United States are financially underserved. Up to 75% of the working population survives paycheck to paycheck with little to no savings. Credit is generally restricted, but for the underserved, credit is either non-existent or very expensive. The current banking system is generally not equipped to serve low to moderate income consumers, leaving them without many viable choices when making financial adjustments in the absence of credit and savings. Therefore, the underserved population accesses over $790 billion in alternative financial services (AFS) such as bill pay, check cashing, and remittance from non-bank sources. Fees for AFS cost the underserved about $129 billion annually. In addition, another $100 billion is accessed as payday loans annually. A typical payday loan is $400 with an APR in the range of 600%.
The underserved population continues to grow year after year due to financial regulations and macroeconomic conditions. The latest figures reveal that 40% of households earning less than $50k are underserved, and additionally that even 19% of households earning between $50k and $75k and 14% of households earning over $75k are also underserved. According to publically available research, within the U.S., the underserved collectively represent $1 trillion in annual spending with less than 10% market penetration. Global trends of the underserved, when compared to the U.S., represent an opportunity of a much larger magnitude.
There is a need, therefore, for scaleable systems and methods that can serve this underserved population.